environment + technology

Credit crisis shakes up solar land rush

Photo: Todd Woody

The land rush to stake prime sites in the Mojave Desert for solar power plants has moved east from California to a state that knows a thing or two about desert dreaming and scheming — Nevada.

When Green Wombat’s story on the solar land rush was published in the July 21 issue of Fortune (see “The Southwest desert’s real estate boom”), solar energy developers, financiers and speculators had filed lease claims on 226,000 acres of federal land in Nevada. Today, 702,000 acres are in play, largely thanks to Goldman Sachs’ aggressive moves to lock up land. The New York investment giant has put claims on about 300,000 acres of Bureau of Land Management dirt in the Silver State — in one week alone, it filed claims on some 187,000 acres.

Given its financial firepower, Goldman’s designs on the desert have been a matter of intense interest. (The firm also has filed claims on 125,000 acres in California.) Goldman (GS) declined to discuss its solar strategy, but a review of BLM documents and interviews with green energy executives sheds some light on its power plans as the financial crisis triggers a shakeout in the solar land rush.

Over the past two years, scores of companies — from Silicon Valley startups to Chevron (CVX) to utility FPL (FPL) — have scrambled to put lease claims on the nation’s best solar real estate to build massive megawatt solar power plants. In California, where utilities face a state mandate to obtain 20% of their electricity from renewable sources by 2010 with a 33% target by 2020, claims have been filed on nearly 1 million acres. If all those solar stations were built, they would generate a staggering 60,000 megawatts of electricity, or nearly twice the power that California currently consumes.

With most of the prime solar hot spots taken in California, the action is moving to sun-drenched states like Nevada where there’s plenty of wide-open desert land. The BLM has yet to issue any leases and is currently evaluating the applications on a first come, served basis. A key consideration: whether the applicant can deploy a viable solar technology.

But with the credit crunch threatening to derail many of those projects, companies are jockeying to score the best sites – those near transmission lines and water – when the weak are weeded out by a failure to obtain financing or a proven solar technology. Some sites have two or three companies queued up in case the first company in line falters.

For its part, Goldman Sachs has brought in its Cogentrix Energy subsidiary to develop its solar projects, according to BLM records. Cogentrix is a Charlotte, N.C.-based owner and operator of coal and natural gas-fired power plants that Goldman acquired for $2.4 billion in 2003.

“Cogentrix doesn’t have a solar technology,” says Rob Morgan, executive vice president and chief development officer for Silicon Valley solar startup Ausra. He says Ausra, which is building a solar power plant for utility PG&E and itself has staked claims in Arizona and Nevada, has held discussions with Goldman about its solar technology.

European renewable energy companies are also taking advantage of the market turmoil. State and federal records show that Iberdrola Renewables, a spinoff of Spanish energy giant Iberdrola, has quietly acquired a year-old Henderson, Nev., startup called Pacific Solar Investments — and its claims on about 180,000 acres of desert land in Arizona, California and Nevada. Iberdrola Renewables is the world’s largest wind developer.

The saga of Pacific Solar shows how cutthroat the competition for solar real estate has become. Just ask Avi Brenmiller, CEO of Israeli solar power plant company Solel, which last year inked a 553-megawatt deal with PG&E (PCG). Brenmiller now finds himself up against his former COO, David Saul, who set up Pacific Solar and began filing land claims while still working for Solel, according to BLM records and Brenmiller. During this time, Saul also was making land claims on behalf of a second solar company, IDIT, where he serves as CEO, according to filings with the Arizona Secretary of State’s office.

Five days after leaving Solel in August 2007, Saul filed a claim on a California site, getting second in line behind Goldman but beating his former employer to the punch by a week. Solel is now behind Pacific Solar and IDIT on two other sites. “So he’s now a competitor in the land rush, which is one of the problems we face,” Brenmiller told me ruefully when we met in San Francisco earlier this year.

Saul did not respond to requests for comment. Iberdrola Renewables also did not return requests for comment.

French energy company EDF’s U.S. subsidiary, enXco, meanwhile has been joined in the land rush by Portuguese utility company EDP and Germany’s Solar Millennium. Spanish renewable energy heavyweight Acciona’s name doesn’t appear on any land claims. But the CEO of Acciona’s U.S. solar operations, Dan Kabel, started a company called Bull Frog Green Energy that has filed claims on 56,000 acres in California and Nevada. Kabel did not respond to a request for comment.

Other new players in the desert solar game include U.S. energy giant Sempra (SRE), which wants to lease 11,000 acres in California’s Imperial County for a 500-megawatt photovoltaic power plant. That could be good news for solar cell maker First Solar (FSLR), which is currently building a smaller solar power plant for Sempra in Nevada. Johnson Controls (JCI), the Fortune 100 automotive and power systems conglomerate, has put in a solar land claim in Nevada. Even former hotel magnate Barry Sternlicht, founder of Starwood Hotels & Resorts, wants a piece of the action through his Starwood Energy Group, which has filed claims in Arizona and Nevada to build solar power plants.

SolarReserve, a Santa Monica, Calif-based solar startup backed by Citigroup and Credit Suisse, has BLM land claims in California and Nevada and is also negotiating with smaller companies that staked claims on prime solar power plants with access to the transmission grid.

“We have done deals with three or four applicants in the BLM queue,” SolarReserve chief operating officer Kevin Smith tells Green Wombat. “The smaller companies with land claims are typically speculators who don’t have their own technology.”

Industry insiders say a shakeout in the land rush is inevitable, given the credit crunch and too many companies in the chase for the best solar power plant sites.

That’s Ausra’s thinking. With the financial crisis putting the billions of dollars needed to build big solar projects out of reach, the company is repositioning itself as a supplier of solar technology as well as a builder of solar power plants.

“We see our future as being a technology provider,” says Ausra’s Morgan, who says the company has had discussions with various power plant developers. “And hopefully a lot of these developers in the BLM queue will use Ausra technology.”

5 Responses

All this solar bull is fine for the west coast, but when can we expect solar installers to focus on the Northeast, where solar electricity could make a big difference in electric bills. Trying to find an electric solar installer east of the Mississippi is like looking for the proverbial needle in the haystack.

This is a very well-written magazine, but do-it-yourself does not mean ‘violate electrical codes’ or ‘cut corners’ as they are very keen on safe installations.

This magazine does not cover large installations that big businesses might do, like Wal-Mart or Google, but that is probably only due to no one writing about the installations – trade secrets, you know.

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Regarding this article, more large-power installations should be made to offset the huge air conditioning loads that hit the electrical grid in the hot afternoons in the summertime. And West Texas, New Mexico, Arizona, Nevada sure have a lot of arid land. Any solar installation that does not require copious quantities of water should do well. I calculate that an installation of solar electric panels could generate over 140 megawatts per square mile (during sunlight).

It will be a long time before most suburbanites will be installing their own solar electric panels, and apartment dwellers certainly cannot, nor can skyscrapers – too much shadow in-between.

But the large tilt-wall buildings certainly can have solar panels on their roofs, to power the AC units in the summertime or supply power to charge electric autos in their parking areas.

About Green Wombat

Green Wombat is written by
Todd Woody, a veteran environmental journalist based in California who writes for The New York Times, the Los Angeles Times, Grist and Yale e360. He's one of the few people on the planet who have held a northern hairy-nosed wombat in the wild.

Todd formerly was a senior editor at Fortune magazine, an assistant managing editor at Business 2.0 magazine and the business editor of the San Jose Mercury News.